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Heterogeneity in the Effect of Home Energy Audits: Theory and Evidence

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  • Manuel Frondel

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  • Colin Vance

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Abstract

A longstanding question in the study of energy demand concerns the role of information as a determinant of home efficiency improvements. Although the provision of information via energy audits is frequently asserted to be an effective means for governments to encourage the implementation of efficiency-enhancing renovations, empirical support for this assertion is tenuous at best. Apart from endogeneity issues with respect to receiving an audit, two other factors have complicated attempts to measure their effect: First, the nature of the information provided by the audit is typically unobserved, and, second, the response to this information may vary over households. Using household data from Germany, we address both sources of heterogeneity by estimating a random-parameter model of four retrofitting alternatives. In addition to confirming the importance of costs and savings as determinants of renovation choices, our results suggest that the effects of consultancy vary substantially across households, with some households responding negatively to the provision of information. Copyright Springer Science+Business Media Dordrecht 2013

Suggested Citation

  • Manuel Frondel & Colin Vance, 2013. "Heterogeneity in the Effect of Home Energy Audits: Theory and Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 55(3), pages 407-418, July.
  • Handle: RePEc:kap:enreec:v:55:y:2013:i:3:p:407-418
    DOI: 10.1007/s10640-013-9632-4
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    References listed on IDEAS

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    1. Scott, S., 1997. "Household energy efficiency in Ireland: A replication study of ownership of energy saving items," Energy Economics, Elsevier, vol. 19(2), pages 187-208, May.
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    8. Joachim Schleich, 2004. "Do energy audits help reduce barriers to energy efficiency? An empirical analysis for Germany," International Journal of Energy Technology and Policy, Inderscience Enterprises Ltd, vol. 2(3), pages 226-239.
    9. Hirst, Eric & Goeltz, Richard, 1985. "Estimating energy savings due to conservation programmes : The BPA residential weatherization pilot programme," Energy Economics, Elsevier, vol. 7(1), pages 20-28, January.
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    Citations

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    Cited by:

    1. Louis-Gaëtan Giraudet & Sébastien Houde, 2015. "Double Moral Hazard and the Energy Efficiency Gap," CIRED Working Papers hal-01260907, HAL.
    2. Mark A. Andor & Manuel Frondel & Colin Vance, 2017. "Mitigating Hypothetical Bias: Evidence on the Effects of Correctives from a Large Field Study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(3), pages 777-796, November.
    3. Achtnicht, Martin & Madlener, Reinhard, 2014. "Factors influencing German house owners' preferences on energy retrofits," Energy Policy, Elsevier, vol. 68(C), pages 254-263.
    4. Schleich, Joachim & Gassmann, Xavier & Faure, Corinne & Meissner, Thomas, 2016. "Making the implicit explicit: A look inside the implicit discount rate," Energy Policy, Elsevier, vol. 97(C), pages 321-331.
    5. Louis-Gaëtan Giraudet & Sébastien Houde, 2014. "Double moral hazard and the energy efficiency gap," CIRED Working Papers hal-01016109, HAL.
    6. Olsthoorn, Mark & Schleich, Joachim & Hirzel, Simon, 2017. "Adoption of Energy Efficiency Measures for Non-residential Buildings: Technological and Organizational Heterogeneity in the Trade, Commerce and Services Sector," Ecological Economics, Elsevier, vol. 136(C), pages 240-254.
    7. Cati Torres & Sergio Colombo & Nick Hanley, 2014. "Incorrectly accounting for preference heterogeneity in choice experiments: what are the implications for welfare measurement?," Discussion Papers in Environment and Development Economics 2014-07, University of St. Andrews, School of Geography and Sustainable Development.
    8. Louis-Gaëtan Giraudet & Sébastien Houde, 2015. "Double Moral Hazard and the Energy Efficiency Gap," Working Papers hal-01260907, HAL.
    9. Ramos, A. & Gago, A. & Labandeira, X. & Linares, P., 2015. "The role of information for energy efficiency in the residential sector," Energy Economics, Elsevier, vol. 52(S1), pages 17-29.
    10. Louis-Gaëtan Giraudet & Sébastien Houde, 2014. "Double moral hazard and the energy efficiency gap," Working Papers hal-01016109, HAL.
    11. Palmer, Karen & Walls, Margaret & O'Keeffe, Lucy, "undated". "Putting Information into Action: What Explains Follow-up on Home Energy Audits?," Discussion Papers dp-15-34, Resources For the Future.
    12. Meier, Helena & Tode, Christian, 2015. "How Technological Potentials are Undermined by Economic and Behavioural Responses - The Treatment Effect of Endogenous Energy Efficiency Measures," EWI Working Papers 2015-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    13. Louis-Gaëtan Giraudet, 2018. "Energy efficiency as a credence good: A review of informational barriers to building energy savings," Working Papers 2018.07, FAERE - French Association of Environmental and Resource Economists.

    More about this item

    Keywords

    Energy audit; Environmental policy; Mixed logit ; Random-coefficient models; C35; D81; Q41;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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